Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

Assistant Edge

March 2008

March 31, 2008

Had an interesting online discussion with Yury Gitman, the owner of the artisan manufacturing firm My Beating Heart and the consulting firm Banana Design Lab. They manufacture a plush heart-shaped pillow that gently beats out a slow, but naturally-changing steady heart-like rhythm. The product is designed to help children and grown-ups to nap, daydream, meditate, and relax.

According to their website:

"My Beating Heart employs new advances in computer science, Artifical Intelligence, and haptic design. But we also developed the technology inside each Heart by combining the practice of meditation and yoga with software and hardware development. This lead us to design a small micro-computer to run of out specially made software."

Over the last couple of years Yury has made the shift from being an artist to becoming an artisan manufacturer. He kindly spent time answering questions I had on his business. Here are the highlights of our interview:

How big is your company?

Basically, we are very small. When I say "we" I mean "me." I contract or skill-trade with a small team of very talented engineers, designers, and marketing type people. I also have a handful of amazing interns. So the company can have many hands and hats. We are also signing up some sales reps, so some sales are being "outsourced." As far as traditional "outsourcing," only the manufacturing is outsourced.

How do you do your manufacturing?

From my experiences there are three ways to go about manufacturing toys and artsy or techy goods. The first is do it all yourself domestically. The second place is an overseas factory. To go overseas, you can contact factories directly.

The third option, which I do recommend for small start-up operations, are factory agents. Like real estate agents, factory agents (should) know the terrain and have a stable of factories to source for your designs. The good ones will help you along the whole process and will do a lot of hand-holding. A good agent can allow a 1-3 person operation to manufacture goods as if it's a much much bigger company. I've talked to successful companies who design on their kitchen table, and 8 months later are shipping toys all around the world. So a good agent can work wonders for small companies.

One thing to remember about agents, they are not all great. Most are not great. There is a whole industry that feeds on people's hope and dreams. Every factory and agent wants your business and they will ALL tell you they can make your designs. It's like hiring anyone, make sure they are available, can be reached easily, and have relevant experience.

How about marketing and distribution?

Our website so far has been the core of the business, but it's starting to move into brick/mortar retail stores. We just did the Toy Fair, and picked up some gift stores and are talking to more. But if it wasn't for the web, I wouldn't be here talking about this.

What about marketplaces like Etsy or eBay?

Etsy and eBay are great market places that have traffic and flow. But I think it makes sense to start developing your own little piece of cyber real estate because it just give you a different type of legitimacy in the eyes of customers and wholesale (retail store) accounts.

Do you have any additional advice for artists and artisans that are thinking of becoming artisan manufacturers?

If an artist/hobbyist is interested in transitioning to be more product/market focused, I'd tell them to learn to be an entrepreneur. Moreover, they should enjoy the entrepreneur side of it, enjoy learning all about it, and enjoy talking to everyone they know about it. It's not about making money for it's own sake, but about understanding how to distribute their work to their patrons. If they are not truly interested in getting multiple copies of their work to an audience this isn't the path for them.

March 30, 2008

A key theme from our most recent forecast report is the next decade will see the re-emergence of artisans as an economic force. Like their pre-industrial predecessors, these next-gen artisans make a living with their skills, craftsmanship and knowledge. Amplified by technology the new artisans are able to access local and global customers and business partners, compete in most industries and work in a manner that reflects their life values. While most are knowledge artisans, a growing number of next-gen artisans make and market physical products.

We are often asked for examples of next-gen artisans. Because of this, we are going to publish a series of next-gen artisan interviews. In these interviews we will profile small businesses that are helping to create the new artisan economy. We will be profiling a mix of knowledge artisans as well as next-gen artisans that "make" things. We plan on publishing 2-4 interviews each month and will begin this week.

March 28, 2008

The New Media Consortium is a non-profit dedicated to the exploration and use of new media and new technologies. Their members are mostly colleges and universities, but they also have corporate members. They recently released their 2008 Horizon Report, which "charts the landscape of emerging technologies for teaching, learning and creative expression." Their time frame is the next 5 years.

The report covers 6 key emerging technologies:

Grassroots video

Collaboration web

Mobile Broadband

Data Mash-ups

Collective Intelligence

Social Operating Systems

I found the section on social operating systems to be the most interesting. They describe this as:

"The essential ingredient of next generation social networking, social operating systems, is that they will base the organization of the network around people, rather than content. This simple conceptual shift promises profound implications for the academy, and for the ways in which we think about knowledge and learning."

March 27, 2008

1. Abileen Christian University is the first university in the nation to provide iPhones to incoming freshmen. They say 93% of incoming students show up with their own PC, so the school is "choosing to take them to the next level by providing converged mobile devices." Pretty cool.

March 26, 2008

Global Entrepreneurship Week is scheduled for November 17th - 23rd and consists of a global series of small business and entrepreneurship events designed to "inspire, connect, inform, mentor and engage the next generation of entrepreneurs."

They have a blog called Unleash It!that covers small business topics in general as well as details on global entrepreneurship week events and activities.

The CBS News Sunday Morning show recently had a 7 minute long segment on quilting. And if you like bad quilting puns, this video will leave you in stitches (click on this link and then look for "Quilts for Sale").

According to the report quilting is a $4 billion industry, there are 27 million quilters in the U.S., and about 55,000 showed up at a big quilting show in Houston. Quilting even has celebrities, with Ricky Tims apparently being the biggest, and TV shows.

My favorite part of the story is when they talk about a $18,000 computer-aided sewing machine. This machine provides quilters with the ability to produce multiple copies of a quilt design. Very cool and a great example of technology enabling small artisan businesses.

"Many opinions are out there on this one, but from my (business perspective), it certainly raised the profile of this booming industry. I think that pieces such as this help professionals remember that there is a big pie out there."

March 25, 2008

Ethos Water is a bottled water company owned by Starbucks. Their water is sold at Starbucks and other retail locations. For every bottle sold, Ethos donates five cents to a fund that provides clean water to children in developing nations. Because of this mission, Ethos considers itself an "ethical brand." I posted last week on Ethos and what one of their founders calls "The Economy of Integrity."

The lack of clean drinking water is a major global problem, so I was happy to support Ethos. Over the weekend I went to Starbucks and bought a bottle of their water. It cost $1.80. This got me thinking about Ethos, "ethical brands" and doing too well by doing good.

Ethos Water is a premium brand and priced higher than most of its competition. For example, San Pellegrino water was available at Starbucks $1.60, and regular bottled water costing 80 cents was on sale next door. The main reason Ethos is able to price higher is its "ethical branding". They ask consumers to pay a premium price in exchange for helping kids in developing countries get access to clean drinking water.

In theory the premium pricing provides the money that goes to help the children. While I couldn't find any financial data on Ethos on Starbuck's website (more on this later), it struck me that Ethos is likely quite profitable. In addition to charging a substantial premium for their product, their key brand building and marketing expenses are promoting their positioning of "buy water, help children." In other words, ethical branding is their key marketing program and their donation is one of their major marketing expenses. And at 5 cents per bottle, it's not an overly expensive marketing program. Especially since the ethical branding allows Ethos to premium price.

So where does this leave me? In interviews Ethos execs make the point that its not just the money that is important. The Ethos brand "allows people to understand the world water crisis and feel as if they are connected to the solution." This is a good thing. I also think socially responsible companies that do well and make a profit by doing good should be both supported and rewarded. I consider Starbucks to be a pretty socially responsible firm.

As I sat in Starbucks, I realized my issue with Ethos is they may be doing too well financially relative to the good they are doing. They also may be doing too well relative to their positioning. Ethos positions itself as a mission based social service organization, and their website makes them look like a non-profit. I have a hard time reconciling this positioning with their pricing and my back of the napkin calculations of their profitability.

I could be wrong about their financials. Maybe they don't make any money. Maybe they spend all their profits on water programs for kids. However since they don't appear to be transparent about their finances, I don't know. This seems odd, since transparency is something they push as being very important.

I really liked Ethos when I first read about them. But social entrepreneurship is tricky, and to me they may have stepped over the line with their pricing, positioning and profitability - at least based on the information I currently have.

I definitely want to support ethical brands and I would like give Ethos the benefit of the doubt. But for now, my bottom line is their bottom line looks way too good.

March 24, 2008

Spherion Corporation is a large staffing and recruiting company. They've been doing worker survey's for the last decade focused on what workers are looking for from their employers. The most recent report is about 1 year old, but I found it both interesting and relevant.

The focus of the research is what Spherion calls "emergent workers". These workers make up almost a third of the workforce and, according to the report, as a group they are embracing "a new attitude and mindset towards career and the employment contract."

Emergent workers tend to have the following work related values:

They believe they are in charge of their career.

They believe they should be rewarded based on performance not tenure.

They are drawn to environments with frequent change and excitement.

They want the opportunity to contribute at a high level.

They son't want to be bogged down by rule, regulations and micro-management.

They are interested in work/life balance.

They are less driven by job security and safety.

Emergent workers tend to be high performers, but harder to keep happy than traditional workers. While the study says that emergent workers are spread across all demographic cohorts, our research indicates this description more broadly fits Gen Y than other groups.

One of the interesting conclusions of the study is: "Emergent workers won't fret if their employer doesn't embrace these values or offer such an environment, they will simply leave."

March 21, 2008

Interesting post on the Global Strategy Institutes blog on the role of social entrepreneuship. The post is about Starbuck's owned Ethos Water. Ethos makes bottled water that is sold in Starbucks and other retail locations. For every bottle sold, Starbucks donates five cents to a Starbucks run fund that provides clean water to children in developing nations.

According to the blog post, the founder of Ethos Water has coined the phrase "the economy of integrity" to describe social entrepreneurship. The essential elements of this are (from the blog post):

Socially-oriented mission from the outset;

Authenticity;

Commitment across the value chain;

Transparency from the start; and

Consumer engagement beyond the cash register

It is not clear to me why we need a new name - this are basically the same elements that are listed in most definitions of social entreprenship. But hey, if it leads to more social entrepreneurship then great.

March 20, 2008

A recent book from Harvard Business Press called 5 Future Strategies You Need to Know Right Nowcovers five business strategies that the author - a Boston Consulting Group consultant - believes will become important over the next 3-5 years. One of the strategies is "sidestepping economies of scale". Key quote on this strategy:

"Many business leaders are reexaming their assumptions about the benefits of scale. Scaling down, not up, and building "disposable factories" and even "disposable strategies" are becoming new keys to lowering costs and boosting performance."

The author goes on to suggest that companies should explore new approaches that limit invested capital.

The scaling down of fixed costs is creating many new opportunities for small businesses. We discuss this in more detail in most recent forecast report.